Recording employer payroll taxes Richardo’s Mexican Restaurant incurred salaries

Question

Recording employer payroll taxes

Richardo’s Mexican Restaurant incurred salaries expense of $65,000 for 2014. The payroll expense includes employer FICA tax, in addition to state unemployment tax and federal unemployment tax. Of the total salaries, $17,000 is subject to unemployment tax. Also, the company provides the following benefits for employees: health insurance (cost to the company, $2,060), life insurance (cost to the company 7% of salaries expense). Journalize Richard’s expense for employee benefits and for payroll taxes. Explanations are not required

Explanation / Answer

Journal of employee benefits

Date

Accounts and explanation

P.ref

Debit

Credit

Salaries expense

$65,000

FICA—OASDI taxes payable (6.2% on $65,000)

$4,030

FICA—Medicare taxes payable (1.45% on $65,000)

$942.50

Employee health insurance payable

$2,060

Employee life insurance payable (7% on $65,000)

$4,550

Salaries payable

$53,417.5

To record salaries expense and withholdings

Journal of payroll taxes

Date

Accounts and explanation

P.ref

Debit

Credit

Payroll tax expense

$6,026.50

FICA—OASDI taxes payable (6.2% on $65,000)

$4,030

FICA—Medicare taxes payable (1.45% on $65,000)

$942.50

FUTA (0.6% on $17,000)

$102

SUTA (5.6% on $17,000)

$952

To record employer’s payroll tax expense)

Date

Accounts and explanation

P.ref

Debit

Credit

Salaries expense

$65,000

FICA—OASDI taxes payable (6.2% on $65,000)

$4,030

FICA—Medicare taxes payable (1.45% on $65,000)

$942.50

Employee health insurance payable

$2,060

Employee life insurance payable (7% on $65,000)

$4,550

Salaries payable

$53,417.5

To record salaries expense and withholdings

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